Navigating Retirement: Annuities vs. IRA Withdrawals for Louisiana-Pacific Employees

There are just a couple of things almost all Louisiana-Pacific retirees need when they hit retirement: predictable income and protection against a cluster of risks, which include longevity risk, performance risk and sequence-of-returns risk.

In the past we have seen retiring Louisiana-Pacific employees utilize the “4% rule,” where retirees take annual withdrawals start at 4% of the entire portfolio and increase with inflation. They then keep the remainder of the portfolio with at least 50% invested in equities. Based on historical data, this would give a Louisiana-Pacific retiree about 30 years of retirement income.

As the economy constantly changes, a number of factors may force prospective Louisiana-Pacific retirees to revisit the 4% rule. It may be worth considering annuities as an alternative.

As life expectancies increase, Louisiana-Pacific retirees need to prepare for expenses over a longer time frame. In the past we would plan for a 15 to 20 year retirement, but now we need to prepare for a 30 to 35 year retirement. What is available to assist meeting the 35-year time frame?

The annuity strategy can assist with a few of the pitfalls we see in the 4% rule. For example:

If you need $50,000 per year in retirement and need that for 30 years, you may need $1.2 million in fixed income at a 3% interest rate. BUT if you look to fund $50,000 for 30 years, you can cover that expense with $800,000 by choosing the annuity option.

The other pitfall with the 4% rule is that it may not reflect a client’s risk tolerance. When you are accumulating assets, you can afford more volatility and can take on more risk than when in the retirement and withdrawal phase after leaving Louisiana-Pacific.

Also, should we see a drop in the market, you would be able to reduce your income using the 4% rule, which you cannot do if you choose an annuity option.

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What is the primary purpose of the Louisiana-Pacific 401(k) Savings Plan?

The primary purpose of the Louisiana-Pacific 401(k) Savings Plan is to help employees save for retirement through tax-deferred contributions.

Who is eligible to participate in the Louisiana-Pacific 401(k) Savings Plan?

All full-time employees of Louisiana-Pacific who meet the age and service requirements are eligible to participate in the 401(k) Savings Plan.

How can Louisiana-Pacific employees enroll in the 401(k) Savings Plan?

Louisiana-Pacific employees can enroll in the 401(k) Savings Plan by completing the enrollment form available through the company’s HR portal.

Does Louisiana-Pacific offer a company match for 401(k) contributions?

Yes, Louisiana-Pacific offers a company match for employee contributions to the 401(k) Savings Plan, subject to specific terms and conditions.

What types of contributions can employees make to the Louisiana-Pacific 401(k) Savings Plan?

Employees can make pre-tax and, in some cases, after-tax contributions to the Louisiana-Pacific 401(k) Savings Plan.

Are there any limits on how much I can contribute to the Louisiana-Pacific 401(k) Savings Plan each year?

Yes, the IRS sets annual contribution limits for 401(k) plans, and Louisiana-Pacific adheres to these limits.

How often can Louisiana-Pacific employees change their contribution amounts?

Louisiana-Pacific employees can change their contribution amounts at any time, subject to the plan's rules.

What investment options are available in the Louisiana-Pacific 401(k) Savings Plan?

The Louisiana-Pacific 401(k) Savings Plan offers a variety of investment options, including mutual funds and target-date funds.

Can Louisiana-Pacific employees take loans against their 401(k) savings?

Yes, Louisiana-Pacific allows employees to take loans against their 401(k) savings, subject to specific plan provisions.

What happens to my Louisiana-Pacific 401(k) savings if I leave the company?

If you leave Louisiana-Pacific, you can choose to leave your savings in the plan, roll them over to another qualified plan, or withdraw the funds, subject to tax implications.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Name of the Plan: Louisiana-Pacific Pension Plan. Pension Formula: The plan uses a traditional defined benefit formula, which is calculated based on years of service and average compensation. Years of Service Requirement: Employees generally need to accumulate a minimum of five years of service to be vested. Age Qualification: The typical retirement age is 65, but early retirement options are available starting at age 55 with reduced benefits. Company Acronym and Terminology: The pension plan is commonly referred to as "LP Pension Plan" within internal documentation. Louisiana-Pacific 401(k) Plan: Name of the 401(k) Plan: LP 401(k) Savings Plan. Eligibility: Employees are eligible to participate from the first day of employment. Company Matching Contributions: Louisiana-Pacific provides a matching contribution, typically matching 50% of the employee's contributions up to 6% of their salary. Vesting: Employees are fully vested in their contributions immediately, while company contributions vest after three years of service. Company Terminology: Internally, this is referred to as the "LP 401(k)" and includes standard financial terms like "deferral" and "matching."

Restructuring and Layoffs: In 2024, Louisiana-Pacific Corporation (LP) announced it would cut back on operations at five North American mills due to low demand and product pricing (FloorDaily). This restructuring is expected to lead to minimal layoffs at the affected facilities. LP also announced mill closures and production curtailments across Texas, Georgia, and Wisconsin (Go Layoffs). This news is critical to address because of the ongoing economic uncertainties, which have been exacerbated by rising inflation and fluctuating demand in the construction materials sector. Companies in this industry must remain flexible to avoid significant financial impacts while protecting their workforce and ensuring long-term viability. Given the current political and tax environment, such restructuring decisions can have far-reaching effects on both employees and the local economy, making it essential to monitor developments closely.

Louisiana-Pacific (LP) Stock Options and Restricted Stock Units (RSU) Overview Louisiana-Pacific Corporation (LP) offers its employees stock options and RSUs through the 2022 Omnibus Stock Award Plan. The RSU award grants employees the right to receive company shares upon vesting, typically over a period of three years. Louisiana-Pacific employees eligible for these awards include senior executives and other high-performing employees. Under this plan, RSUs are awarded at the discretion of the company's administrator, allowing for a retention of shares to satisfy tax obligations at the fair market value of the shares on the date of delivery (Louisiana-Pacific Corporation) (Justia). In 2022, LP's stock options and RSUs were available to both management and key employees as part of a broader incentive structure to align employees' interests with shareholders. The eligibility criteria were expanded in 2023, allowing more mid-level employees to participate in the equity compensation program. By 2024, Louisiana-Pacific continued to refine its compensation plan by adjusting vesting periods and tax treatment options to comply with updated federal regulations (Louisiana-Pacific Corporation) (markets.businessinsider.com). Louisiana-Pacific offers stock options and RSUs as part of its incentive-based compensation, ensuring employees can benefit from the company's financial success. These stock options are generally granted with a fixed exercise price, while RSUs vest over time without requiring any purchase from employees (Justia) (Louisiana-Pacific Corporation).

Louisiana-Pacific Corporation (LP) offers a comprehensive range of healthcare benefits to its employees, designed to support their well-being while also being competitive in the industry. The company provides full-time and part-time employees with medical, dental, and vision coverage, including a wellness program that incentivizes healthy behavior. These benefits extend to dependents and domestic partners, ensuring broad support for employee families. In 2023, LP enhanced its healthcare options to include flexible telemedicine services and an expanded mental health program, reflecting growing trends in the industry toward supporting both physical and mental well-being. With healthcare costs rising significantly, LP's focus on a holistic benefits package helps mitigate some of the economic pressures felt by employees in today’s challenging economic climate (LP Building Solutions) (Louisiana Health Connect). In response to the broader economic and political environment, LP has also adapted its healthcare offerings to account for inflationary pressures on healthcare costs. For example, in 2024, the company implemented measures to absorb part of the projected 5.4% increase in healthcare costs, preventing significant cost burdens from falling on employees. Additionally, LP's safety and health initiatives, as outlined in their sustainability reports, have been crucial in maintaining workplace health, particularly as global health risks have increased. The company’s decision to prioritize safety training and offer preventative health resources exemplifies its proactive approach in a politically charged healthcare landscape. These efforts help ensure that LP remains an attractive employer, retaining talent amidst economic uncertainty (LP Building Solutions) (Louisiana Health Connect).